Sept. 20 (Bloomberg) -- Lehman Brothers Holdings Inc., the biggest underwriter of U.S. mortgage bonds, named Chief Financial Officer Chris O'Meara head of risk management worldwide and promoted a hedge fund banker to replace him.

The 46-year-old O'Meara, who has served as CFO since 2004, will be succeeded by Erin Callan, Lehman said in a statement today. Callan, 41, currently oversees an investment banking group that advises hedge funds. The appointments are effective on Dec. 1, the New York-based firm said.

Lehman reported this week that third-quarter profit declined 3 percent, less than analysts expected, as the firm limited losses in leveraged loans and mortgage holdings by hedging in financial markets. Speaking to investors on the Sept. 18 conference call, O'Meara said the firm had weathered the worst of the credit market fallout from the U.S. housing slump.

``He's been a solid CFO,'' said Brad Hintz, a former Lehman finance chief who's now an analyst at Sanford C. Bernstein & Co. in New York. ``He's very good at explaining the numbers, as he did just two days ago with the third quarter, and has won over the institutional community.''

O'Meara replaces Madelyn Antoncic, who's becoming global head of financial market policy relations, a new post. O'Meara joined Lehman in 1994 and has served as controller and head of expense management, among other positions.

Callan joined the firm in 1995. She was the head of the global finance solutions group before taking on the role of advising hedge funds. O'Meara and Callan will report directly to Chief Executive Officer Richard Fuld as well as to President Joe Gregory, Lehman said.

Leveraging People

``Lehman Brothers' success depends in large part on leveraging our best people's strengths,'' Fuld said in the statement.

Antoncic, 54, joined Lehman in 1999 in risk management and has overseen global risk management in the last five years. She was named bank risk manager of the year by Risk magazine in 2006, the statement said. In her new role, Antoncic will report to Chief Legal Officer Tom Russo, and ``connect with'' government officials, the firm said.

Lehman fell $1.80, or 2.8 percent, to $62.31 in New York Stock Exchange composite trading. The shares have declined 20 percent this year.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net.

Last Updated: September 20, 2007 17:02 EDT